Pursuant to Section 202 (e) of the Trade Act of 1974, I recommend that the President
impose a four year quantitative restriction on the importation of lamb meat into the United States.
In my view, such a remedy is the most appropriate, particularly in light of the Commission's
unanimous finding that the recent surge in imports threatens serious injury to the growers,
feeders, packers, and breakers who collectively constitute the domestic lamb meat industry. In
rendering that decision, we found that the imports are entering the United States in such
increased quantities as to be a substantial cause of the threat of serious injury. For several
reasons, I believe that my recommendation will provide the most effective relief to facilitate the
efforts of the domestic industry to make a positive adjustment to the increased import
competition.

Specifically, the recommended quantitative restraint is a straightforward method of
countering and delaying the import surge that threatens the industry. It is tailored to directly
offset the very surge that threatens serious injury. At the same time, it ensures that the relief
provided is not more than that necessary to prevent the serious injury. I am mindful that
petitioners have proposed a tariff rate quota. I considered the alternative of recommending some
type of tariff but determined that the nature of this industry made it infeasible to determine the
probable economic effects of such a relief measure. This industry is composed of distinct
segments, several of which are highly fragmented. Consequently, there were a broad range of
variables to consider in connection with a tariff and this naturally resulted in a broad range of
possible outcomes regardless of the tariff level selected. Moreover, the available pricing data
demonstrates that the imports from Australia and New Zealand generally undersold the domestic
industry. Thus, it is unclear to what extent those exporters could pass along any tariff without
affecting domestic price levels. I was therefore unable to assess the likely effects of a tariff-
based remedy on the industry as a whole within an acceptable margin of certainty.

As to the specific recommendation, I find that calendar years 1995 through 1997 are the
most recent three years that are representative of lamb meat imports. That three year period is
equally divided between a time the industry was receiving payments under the Wool Act and
when it was not receiving any such payments. That period also does not include the substantial
increase in imports that occurred in 1998. I recommend a quantitative restriction of 52 million
pounds as necessary to prevent the serious injury. This restriction is slightly in excess of the
average carcass-weight equivalent of total imports for the three most recent representative years,
which was 51,471,000 pounds. I further recommend that this restriction be phased down by
increasing the quota to 56 million pounds in the second year and to 61 million pounds in the third
year. In the fourth year, the restriction would be 70 million pounds. That amount is based on the
average annual increase in imports for the representative period applied to the 1997 import level.
Thus, my recommendation phases down the quantitative restriction on imports in a predictable
manner, so that the industry would have time to implement its adjustment plan.

I have recommended that the quantitative levels increase disproportionately at the end of
the remedy period because, while all segments of the industry will benefit from the remedy, it
will take growers about two years to adjust production in response to the temporary relief. I also
recommend that the quantitative restriction be allocated on a country-by-country basis, with
separate allocations for Australia, New Zealand, and "all other" countries in proportion to their
average share of imports into the United States during the representative three year period. I
recommend that this import relief not apply to imports of lamb meat from Canada, Mexico,
Israel, and beneficiary countries of the Caribbean Basin Economic Recovery Act or the Andean
Trade Preference Act.

In addition, in 1996, Congress established the National Sheep Industry Improvement
Center and authorized a total of $50 million for that Center. This Center was established to
promote the development of the sheep industry. Of the total authorization, $20 million has been
appropriated but has not yet been made available to the domestic industry. I recommend that the
President take all action necessary to ensure that the Center is fully operational as quickly as
possible. I also recommend that the President make available, either through the Center or
directly to the industry, the full measure of Federal assistance programs, including those
administered by the U.S. Department of Agriculture.

Finally, for any recommended remedy to be effective, the domestic industry must
collectively undertake significant efforts to promote a positive adjustment to the import
competition. The industry submitted an adjustment plan to the Commission in the course of this
investigation. In this regard, I note that in the event the President takes action and provides
import relief, the Commission is required to monitor developments in the industry, including the
industry's efforts to adjust to import competition. With that observation, I conclude my
statement. I will provide more detailed views with the opinion that will issue in this
investigation.